Friday, October 07, 2005

No Sunday post this weekend, casual market commentary

I'm going out of town for the long weekend, so I won't be making my usual Sunday night post. I am still way net short the market. I got short the QQQQ back in August when it was above $40 and I added to my position every $0.20 down for a few days. Although I have done a little bit of trading in and out over the last two months, I still have 3/4 of that original position and a little more added recently. I must admit, I started to sweat a little on Tuesday morning when the QQQQ had rallied all the way back to $39.88 and I read Monday Dan Zanger was anticipating an up-side breakout this week on the AIQ website. Turned out to be a fake-out.

I don't expect to act on any buy candidates until I can gauge the strength of the next rally. I've only got three long positions remaining right now (GIGA, GEPT, and ENTU) and I'm either flat, or just slightly underwater on all of them, but they are still technically healthy. ENTU looks the most favorable right now, as it is pulling back on light volume, making a clean upper-channel line to break out from on the daily chart. I will be quick to sell any of these positions if I see high volume pushing them under key price support levels.

I closed out SPIR at a small loss today. I was carrying it long from $10.10, rode it up to the top of its range near $11.50, and right back down. I got out because of its failure to recover the 50-day SMA today, and the large sell-off in the energy sector will likely catch up to it soon. It helps to look at other similar stocks. DSTI is also a solar play. I mentioned last week that I sold my DSTI position for a loss at $12.50. My average cost was $13.50, making my loss about 7.5%. Today DSTI closed at $10.92, 13% lower than where I cut my loss, and 19% lower than my original entry point. This serves as a good reminder why it is so important to cut losses without hesitation when you are trading in these volatile stocks.

So my plan? Basically to sit tight and manage what I'm carrying. If this selloff gets real nasty, it should be pretty easy to pick out some great short-sale candidates. But the long-term trend is still up for the time being, so I don't feel rushed trying to find more shorts. Besides, the naz still in a range. I read a great quote from my favorite Market Wizard Ed Seykota in Michael Covel's book, Trend Following, last night: "To avoid whipsaws, stop trading." Timely advice, because I know a lot of people are stopping out all over the place right now.


At 11:26 AM, Blogger DAN said...

what's your thoughts on CTIB?? from $6.99 with new patent to mid to low $4's. Time for rally??

At 10:26 PM, Anonymous Technicator.NET said...

CTIB's chart looks similar to SPIR.

I found that amusing...

But watch out, the last tp was a lower top, just like in SPIR. Higher tops good.


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